The US military appears to have temporarily jettisoned plans to launch a new offensive against Falluja following urgent consultations on Saturday between George Bush and his senior generals over the increasingly grim situation in Iraq.

After another weekend of carnage across the country, in which at least 75 Iraqis were killed, US officials in Baghdad said last night they were hopeful that the standoff in Falluja between US forces and the Iraqi resistance could be resolved using a "political track".

Coalition officials said they were "cautiously optimistic" a peaceful solution could be found after fresh negotiations with local leaders. "We have seen progress in the past 24 hours," the US spokesman in Baghdad, Dan Senor, claimed.

Under an agreement announced last night, US marines and Iraqi police officers will begin joint patrols inside the town tomorrow, with US troops venturing inside Falluja for the first time in nearly a month. In return, militants have an extra 48 hours to hand over heavy weapons.

There are still grave doubts, however, whether civic leaders who have negotiated the deal can persuade the Iraqi fighters inside Falluja to accept the US terms. On Saturday the coalition provisional authority announced it was also offering $10m (£5.6m) to reconstruct Falluja, with $25m to follow.

The abrupt change of tactics came after President Bush held video conferences with his beleaguered administrator in Iraq, Paul Bremer, and senior military commanders. They are believed to have warned him that any assault on the town would inevitably be bloody, and could lead to a violent backlash across Iraq.

"There would be a ripple effect," one western diplomat in Baghdad said. "The carnage would be huge."

Last Friday coalition officials had hinted that a new and merciless offensive against militants holed up in Falluja could take place within days. The "full force" of the US marines would be brought to bear on anyone who resisted, Brigadier General Mark Kimmitt said.

Yesterday, however, Mr Senor struck an emollient tone. "We have always been cautiously optimistic," he said.

But the Bush administration's sudden change in rhetoric came against a gloomy backdrop of yet more violence.

At least five Iraqi children were killed yesterday after a roadside bomb blew up an American convoy in Baghdad. One US soldier died in the attack. Iraqi witnesses said that after the blast US forces opened fire indiscriminately, killing four children and wounding eight. The US military said gunmen firing on US troops shot the children.

In Mosul, four civilians were killed yesterday and 13 injured in rocket attacks, and the US military said a helicopter gunship had killed 25 "enemy personnel" taking refuge in a house 10 miles south-east of Falluja. In a rocket attack in a crowded market in Baghdad's Sadr City, six people were killed on Saturday, and 38 people wounded.

There were also ominous warnings yesterday that the US military is preparing to enter the holy city of Najaf, where the radical Shia cleric Moqtada al-Sadr has been holed up with thousands of armed supporters since launching an uprising against the US occupation last month.

US troops could enter the secular part of the city shortly but would stay away from holy sites, General Mark Hertling told the Associated Press. The US military wanted to impose a degree of control in Najaf, he added.

Mr Bremer described the unresolved situation in Najaf as "highly dangerous". Without naming Mr Sadr's Mahdi militia by name, he claimed that militants were stockpiling weapons and ammunition in mosques, shrines and schools. Iraqi citizens should not tolerate this, he added.